Thailand’s Investment Promotion Policies
Dr. Bonggot Anuroj
Executive Director of Investment Marketing Bureau
Thailand Board of Investment
30 March 2011
1
marketing@boi.go.th
Outline of Presentation
-Investment Promotion Policy
- Investment Trend
- BOI Services
BOI Investment
Policies
3
Liberal Investment Policy
1
2
3
4
No Restrictions on
Repatriation of Profits
100% Foreign Ownership*
No Export requirements
No local content
requirement
*some restrictions apply
List of BOI activities eligible for Investment
Promotion
Agriculture
and
Agricultural
products
Mining,
Ceramics,
and Basic
metals
Light
Industry
Metal
products,
machinery
and
transport
equipment
Electronics
industry and
electronic
appliances
Chemicals,
paper and
plastic
Services and
public
utilities
129 sub-items are eligible for investment promotion
Criteria for Project Approval
• Minimum investment amount of at least 1 million
baht (excluding land cost and working capital)
• Valued added for at least 20 percent of sales
revenues
• A debt-equity ratio (D/E) of less than 3 to 1
• Utilization of modern production processes and
new machinery (used machinery must be less than
10 years old and certified by relevant parties)
• Adequate environmental protection systems
Criteria for Foreign Shareholding
• Projects in agriculture, animal husbandry, fisheries,
mineral exploration and mining and service
businesses under List One of the Foreign Business
Act B.E. 2542: Thai nationals must hold shares
totaling not less than 51 percent of the registered
capital
• Manufacturing projects: there are no equity
restrictions for foreign investors
• The Board may set the amount of shares eligible to be
held by foreign investors on promoted projects when
deemed appropriate
Investment Incentives
TAX Incentives
NON-TAX Incentives
• Import duty reductions or
exemptions on machinery
and raw materials
• Corporate income tax
holidays up to 8 years;
additional 50% reductions
for 5 years
• Double deduction of public
utility costs
• Deductions for
•Land ownership rights
for foreign investors
•Permission to bring in
foreign experts and
technicians
•Work permit & VISA
facilitation
construction/installation costs
infrastructure
8
Major BOI Incentives Schemes
• Decentralization
– Incentives vary according to zones
• Priority activities
– 8-year corporate income tax exemption and exemption of
import duties on machinery regardless of locations
• Sector-specific policies
• Optional incentive scheme
– STI Scheme
• Special temporary measures:
“Investment Promotion Policies
for Sustainable Development”
BOI Zoning
Zone-Based Incentives

Zone 1 includes Bangkok, Samut Prakan, Samut
Sakhon, Nakhon Pathom, Nonhtaburi and
Pathum Thani

Zone 2 includes Ang Thong, Ayutthaya,
Chachoengsao, Chon Buri, Kanchanaburi, Nakhon
Nayok, Phuket, Ratchaburi, Rayong, Samut
Songkhram, Saraburi, and Suphanburi

Zone 3 encompasses the remaining 58 provinces
Source: Thailand Board of Investment
From Zone-Based to Sectoral
Approach
Sector Matrix:
Incentives to strengthen
competitiveness
Strategic or Priority
Activities
Zone-Based
Incentives:
• Zone 1
• Zone 2
• Zone 3
• Maximum incentives
regardless of location
• Customized packages
Examples of Priority Activities
•
•
•
•
•
•
•
Agriculture and agro-industries
R&D
Software development
Molds & Dies
Biotechnology
Alternative energy
Manufacture of hi-tech products e.g. advanced
ceramics
Additional Incentive Package for STI
(Skill, Technology & Innovation)
Privileges will be based on the project’s total
investment in STI expenditures in any of the
following 4 categories:
Adv Tech
Training
R&D
SciTech
Funding
S&T Dev
Fund
Requirement and Additional Incentive
for STI Activities
STI Expenditure
Additional
Incentives
1% of total sales for the first 3 years of
operations or at least 150 million baht
1 year (uncapped)
2% of total sales for the first 3 years of
operations or at least 300 million baht
2 years (uncapped)
3% of total sales for the first 3 years of
operations or at least 450 million baht
3 years (uncapped)
Note: 1. Investment ceiling uncapped. Corporate income tax holiday may not
exceed eight years.
2. Exemption of import duty on machinery
New Policies for 2010-2012
“Investment for Sustainable Development”
Application submission deadline: December 31, 2012
1. Special incentives for 3 groups of targeted activities
1)
2)
3)
Manufacture of eco-friendly material and product, e.g. bioplastics
Energy saving and alternative energy
High technology activities e.g. industrial electronics, electronic parts for
vehicles, biotech, nano-tech, functional fiber etc.
Incentives
•
•
•
•
•
Exemption of import duties on machinery
8-year exemption of corporate income tax with no cap
5-year 50% reduction of corporate income tax on net profit
10-year double deduction of transportation, electricity and water supply
costs
deduction from net profit of 25% of investment in infrastructure
installation and construction costs in addition to normal capital
depreciation
15
New Policies for 2010-2012
“Investment for Sustainable Development”
2) Measure to promote energy conservation,
alternative-energy utilization or reduction of
environmental impacts
Incentives
• Import duty exemption on machinery, regardless of
zone.
• 3-year corporate income tax exemption on the revenue
of existing projects, accounting for 70% of the
investment under this measure excluding cost of land
and working capital.
New Policies for 2010-2012
“Investment for Sustainable Development”
3) Measure to promote production efficiency
improvement by technology upgrade for
manufacturing of new products
Incentives
•Exemption from import duties on machinery, regardless
of zone.
•Exemption from corporate income tax for 3 years,
regardless of zone. The benefit from this exemption may
not exceed 100% of the project’s investment value.
Board of Investment Announcement
No.1/2553 (2010)
Subject: Measure to promote SMEs Investment
Listed of Activities Eligible for SMEs investment
Promotion
52 activities are eligible for promotion
Agriculture and Agricultural Product (13 activities)
Mining, Ceramics and Basic Metals (7 activities)
Light Industry (11 activities)
Metal Product, Machinery and Transport
Equipment ( 12 activities)
Electronic Industry and Electrical Appliance
(5 activities)
Chemicals, Paper and Plastics ( 3 activities)
Service and Public Utilities ( 1 activities)
Conditions (1/2)
Project with an investment of 500,000 baht or more
(excluding cost of land and working capital)
Not less than 51 % of the registered capital must be
Thai shares
Must have a debt equity ratio of less than 3:1
Used machinery which cost less than 10 million baht
are allowed to be used; investment on new
machinery must cost more than 25% of used
machine’s value
Conditions (2/2)
Investment amount of each project must be
less than 80 million baht (excluding cost of
land and working capital). Overall, total value
of company’s net asset must be less than 200
million baht (excluding cost of land and
working capital)
Applications must be submitted by December
31, 2011
BOI Announcement No. 1/2554 (2011)
Granting of Rights and Benefits under section
36(1) and (2) to existing companies to alleviate
the impact of the Strengthening of the Baht
Rights and Benefits (1/2)
 Application must be existing companies with investment
capital, excluding cost of land and working capital, of not less
than one million baht in the following industries
- Production of ready-to-wear garments
- Production of leatherwear
- Production of footwear
- Production of furniture or decorative items
- Production of textiles
- Production of toys
- Production of sport equipment
- Gems and jewelry
- Production of lenses
- Printing
Rights and Benefits (2/2)
 Applicants must be certified by an association or
agency approved by BOI
 Promoted project shall receive rights and benefits in
accordance with section 36 (1) and (2) for period of
1 year, and the renewal thereof shall be pursuant to
criteria prescribed by BOI
 Promoted project shall comply with regulations and
procedures for the application of rights and benefits in
accordance with section 36(1) and (2), as set forth by BOI
 Applicants must submit the application within 31
December 2011
Recent Investment Trend
Comparison of All Net Applications for Investment
Promotion 2008 – Feb 2011
(Includes Foreign and Domestic Projects)
Amount Invested
Number of Projects
+7%
No. of
Projects
1,800
1,489 1,591
1,600
1,400
1,262
1,200
1,000
800
600
359
144
209
E&E
675
101
34
200
87
46
166
2008
2009
267
2010
446.3
447.4
376.2
167
165.8
300
Fashion
320
201
73
21
198
Auto
224
204
251
500
400
213
117
638.1
Chemical 600
432
400
0
Bt
Services 700
Billion
200
269
66
34
43
73
13
5
35
23
41.2
68.6
84.5
65.6
77
56.8
17.9
26.6
38
19.5
67
11.3
29.3
71.3
66.1
19.5
19.2
6.8
14.9
0.3
1
7.5
2008
2009
2010
2011 (Jan-Feb)
Minerals
100
Agro
2011 (JanFeb)
Source: BOI, as of 15 March 2011
52.4
0
6.7
69.3
Japan Remains No. 1 Investor in Thailand
360
351
Foreign Direct Investment Applications
2009
300
Bt Billion
240
2010
-32.7%
236
180
120
104
77
80
60
38
34
43
11
11
35
7
5
0
Total
Japan
EU
Source: BOI, as of Jan 17, 2011
Singapore
China
USA
2
India
BOI Approved SMEs Projects (Jan 2003-Feb 2011)
Type of Activities
1. Agriculture and
Number of Project
Value (Million baht)
177
9,269
4
85
3. Light Industry
23
324
4. Metal Product,
Machinery and
Transport
Equipment
35
677
Agricultural Product
2. Mining, Ceramics
and Basic Metals
BOI Approved SMEs Projects Jan 2003- Feb 2011
Type of Activities
5. Electronic
Industry and
Electrical Appliance
Number of Project
Value (Million baht)
13
176
6. Chemicals, Paper
and Plastics
7. Service and
Public Utilities
48
754
2
32
Total
302
11,319
BOI Services
Investment Matchmaking Program
BOI Support Services
1-Stop for visas & work permits:
work permits in 3 hours
Industrial Subcontracting Services
Vendors meet customers program
(BUILD Unit)
ASEAN Supporting Industry Database
Interaction with other govt. agencies
on behalf of investors
Country desks
Overseas offices
32
BOI Unit for Industrial Linkage
Development (BUILD)
15 years of service
BUILD Activities
• Provide information on subcontracting
opportunities in Thailand via database web
applications
• Assist foreign buyers wishing to source from
Thai manufacturers
• Match buyers and subcontractors in related
businesses
• Arrange participation of Thai manufacturers in
trade shows and exhibitions abroad
ASEAN Supporting
Industry Database (ASID)
• Information and profiles of companies
in supporting industries and
manufacturers of parts and components
in 10 ASEAN countries
• ASID can be easily accessed via the
internet at www.asidnet.org
19-21 May 2011 at BITEC Bangna
More Convenience,
less time,
more efficiency!
One Start One Stop Investment Center
18th Floor, Chamchuri Square Building
319 Phayathai Road, Pathumwan
Bangkok 10330, Thailand
Domestic Call: 0 2209 1100, Inter. Call: (66 2) 209371100
Email: osos@boi.go.th
Services at OSOS
– Staff from relevant agencies will also be available
for consultations on a range of topics.
– Help investors with applications to make sure
investors know what is required to:
•
•
•
•
•
•
Register a company
Apply for investment promotion privileges
Obtain a foreign business license
Tax registration
Complete an environmental impact assessment
Obtain utilities, etc.
– OSOS staff will also accept applications for things
such as corporate name registration, corporate tax
ID numbers, VAT registration, foreign business
licenses, investment promotion incentives, etc.
10 - 25 November 2011
IMPACT Exhibition and
Convention Center
Organized by Thailand
Board of Investment
Objectives
1.
To celebrate the auspicious occasion of the 84th birthday of His
Majesty the King.
2.
To highlight the achievements of Thai industry in the areas of
technology and innovation, as these will greatly enhance
efficiency and industrial competitiveness and result in new,
environment-friendly production.
3.
To build confidence in the Thai economy, while also improving
the country’s image; BOI Fair 2011 will give wide exposure to
the Thai industrial sector’s commitment to serving society and
preserving the natural environment.
4.
To provide an opportunity for members of the industrial
community to meet, conduct business, and network.
Theme
“Going Green for the Future”
โลกสดใส ไทยยัง่ ยืน
General Information
Show date : 10 - 25 November 2011 (16 Days)
Venue :
IMPACT Exhibition and Convention Center
(237,000 sq.m)
- Outdoor : Lakeside
166,000 sq.m
- Challenger 1-3
60,000 sq.m
- Hall 9
11,000 sq.m
Exhibitors: 84 Outdoor Pavilions and more than 3,000
Indoor Booths
Visitors :
More than 5 million visitors expected
Thank You!
www.boi.go.th